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Playtex Products, Inc.

Background:
Hawaiian Tropic is one of the best-known brands in the sun care segment in the U.S. and in key markets around the world. Hawaiian Tropic was founded in 1969 by Ron Rice after a visit to Hawaii inspired him to create a marketable sun care product similar to the natural oils used by native Hawaiians. Since then, Hawaiian Tropic has developed a reputation for quality and innovation in the sun care industry, the brand being positioned as providing "responsible fun in the sun". At the time of the acquisition, Hawaiian Tropic's brand recognition was 80% in the U.S. and its market share (excluding private label) reached 9.7%, making it the fourth largest branded competitor in the sun care segment of the skin care market. The company's broad product portfolio offers items in all major sun care segments including Tanning, General Protection, Baby and Kids, Sunless, After-Sun, Burn Relief, and Lip protection. The Hawaiian Tropic brand is distributed in over 100 countries around the world, with formulations, packaging designs and branding tailored to local consumer demand and competitive dynamics. In 2006, net sales of Hawaiian Tropic exceeded $110 million with approximately 20% of its net sales generated outside of North America, primarily in Europe and Latin America. Hawaiian Tropic is the largest privately owned manufacturer of sun care products in the world.

When Playtex was beginning to look at the possible purchase of Hawaiian Tropic as part of an auction process being conducted by a well known bank, as CEO of Playtex, I decided that we needed to get the help and advice of an outside banker. I chose Sawaya Segalas because of several good experiences that I had in the past with this organization. Not only had they done excellent work for me but I felt that they had the right balance of consumer knowledge and aggressiveness to really help us successfully compete for this property. The Sawaya Segalas team did an excellent job throughout the entire process allowing us to eventually win the auction process at a price which later was widely recognized as an excellent deal for Playtex' shareholders. We were able to achieve this great result because of the careful analysis they provided and the clear understanding they had of both the bidding process and the competitive landscape. I would absolutely look to use them again on another deal and I am sure that they would do a great job for us.
Neil P. DeFeo
Chairman, President and Chief Executive Officer, Playtex Products, Inc.
The Sawaya Segalas team's hands-on approach at all levels was an integral driver of the success of this acquisition. Their attention to detail, professionalism and willingness to help with every facet of the process was refreshing and value added. Their significant contributions enabled productive and informed discussions with our Board of Directors, and their creative thinking allowed us to overcome potential challenges.
Kris Kelley
Executive Vice President and Chief Financial Officer, Playtex Products, Inc.

Playtex Products, Inc. ("Playtex" or the "Company") is a leading manufacturer and distributor of a diversified portfolio of feminine care, skin care and infant care products. Its skin care portfolio includes Banana Boat, Wet Ones and Playtex branded gloves. Sawaya Segalas has had an established long-standing relationship with Playtex and its CEO, Neil DeFeo.

Objective:
Since joining Playtex in October 2004, CEO Neil DeFeo has focused his energies on (a) assembling a world class management team; (b) adjusting Playtex' cost structure; and (c) pursuing organic and external growth initiatives to reshape Playtex' portfolio and improving the performance of the Company. These efforts had been primarily directed at Playtex' two core products line: infant care and skin care. In skin care, the Company was among the leading providers of sun care products, pre-moistened towels and gloves. The Company's Banana Boat brand enjoyed the #2 position in the U.S. market, and represented the largest single brand in the Company's skin care line. Management sought acquisition candidates that fit its clearly defined strategy, requiring a strong strategic, financial, geographic and operational fit with the existing core business. Hawaiian Tropic's positioning in the market perfectly complemented Banana Boat's, and the transaction was viewed as a "must have". Upon the announcement of the transaction, Mr. DeFeo commented that the Hawaiian Tropic acquisition met all of management's stated requirements for a strong acquisition including: (i) Strategically - the acquisition fit well with one of Playtex' core categories - Skin Care; (ii) Financially - the acquisition was expected to be accretive within the first year of ownership; (iii) Geographically - Playtex will gain international infrastructure from which to grow the existing brands of Playtex; and finally, (iv) Operationally - Playtex' management was able to successfully handle the acquisition - both in terms of the size of the acquisition and the categories played in. Sawaya Segalas was given a wide mandate to drive the diligence process and lead the negotiations so as not to miss out on this unique business combination.

Process Highlights:
Sawaya Segalas played a critical role in evaluating Hawaiian Tropic from a financial point of view, coordinating and managing the due diligence process with the sell-side bankers, creating appropriate financial and other analyses to be presented to the Company's senior management and Board of Directors, and helping to negotiate many of the most sensitive elements of the purchase agreement. These included the development of several creative solutions that helped to consummate a favorable purchase agreement with regards to both price and terms. In addition, Sawaya Segalas' specific and detailed knowledge of the consumer industry as well as its reach with certain suppliers in the manufacturing and outsourcing segments enabled it and Playtex to develop certain contingency plans relating to Hawaiian Tropic's Ormond Beach manufacturing facility.

Outcome:
In a fairly competitive process, Playtex offered Mr. Rice the most attractive combination of purchase price and contract terms. The announced purchase price of $83 million (plus a seasonal working capital adjustment) represented approximately a 2006 net sales multiple of 0.74x. At the time of the announcement, Playtex indicated that the transaction was expected to generate annual synergies of approximately 10% of net sales, or $11 million, by 2009 and that it anticipates Hawaiian Tropic's operating income, when fully synergized, to approach the operating margin levels of its existing skin care business of 24%. Therefore, on a synergized basis, the purchase price represents an operating income multiple of about 3.1x.

This transaction represented Mr. DeFeo's first transaction as CEO of Playtex Products, and was very well received by analysts and the investment community. The Company's stock increased over 10% on the day of announcement.
Playtex Products, Inc.
Client
Playtex Products, Inc.
Brand
Hawaiian Tropic Sun Care
Counterparty
Tiki Hut Holding Company, Inc.
Segment
Personal Care, OTC & Cosmetics
Transaction
Acquisition
Transaction Value
$83 million
Closing Date
April 19, 2007
Role
Exclusive Financial Advisor
 
 
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